Why an expanding middle class is no guarantee of political freedom

Wealth creation, the free market and a bourgeois way of life are not a package deal. In fact, they can, and often are, at odds with each other.

Sign Up

Get the New Statesman's Morning Call email.

One the most distinctive writers on economics in recent times, Deirdre McCloskey, describes herself as “a literary, quantitative, postmodern, free-­market, progressive-Episcopalian, Midwestern woman from Boston who was once a man”. Starting out in the Chicago school that produced Milton Friedman – a tradition of quantitative economics of which she remains in many ways a loyal practitioner – McCloskey has never been simply an economist. Unlike her Chicago mentors, she holds the “postmodern” view that, rather than being a value-free discipline modelled on the natural sciences, economics is a branch of the humanities that studies changing modes of discourse and rhetoric. Anyone who wants to understand why some societies prosper and others remain stuck in poverty, she maintains, must understand the virtues that go with wealth creation.

In linking economics with ethics, McCloskey is at one with classical economists such as Adam Smith. She also has something in common with Smith in believing that the free market is more than a human invention. For Smith, the “invisible hand” – a system of hidden adjustments through which unfettered market exchange promotes the public good – was a mark of divine providence at work. Identifying herself as a “Christian libertarian”, McCloskey believes that history is “God’s will in the world”. The rise of the bourgeoisie created contemporary liberal society and its personal freedoms, including the freedom to shed a socially imposed gender identity. McCloskey transitioned from male to female in 1995, when she was 53 years old, a process she recounted in Crossing: a Memoir (1999).

The result of “over 20 years imagining and ten years of writing”, Bourgeois Equality is the concluding volume in a trilogy including The Bourgeois Virtues (2006) and Bourgeois Dignity (2010). For McClos­key, bourgeois society is not the result of capitalist exploitation, as Marxists have claimed. The very word “capitalism”, she writes, is “a scientific mistake”. But nor is this society the automatic result of the workings of certain institutions, as many free-market economists – including those shaping the policies of the World Bank – seem to believe.

The unprecedented growth of wealth that has been created over the past few centuries isn’t the product of “the Indian Ocean trade, English banking, canals, the British savings rate, the Atlantic slave trade, natural resources, the enclosure movement, the exploitation of workers in satanic mills, or the accumulation in European cities of capital”. Instead, modern wealth has its roots in an ethical and rhetorical shift, which came about through “the ideology of European liberalism” – a view of things that originated with “post-millennial” Christianity, a strand of Protestantism that put aside any expectation of an apocalyptic end time in favour of faith in continuing human betterment. Modern secular liberalism, McCloskey argues persuasively, is the offspring of a theological innovation that occurred in 17th-century northern Europe. Less plausibly, she suggests that the modern increase in wealth is a by-product of this shift.

Many of the 67 chapters and nearly 800 pages of Bourgeois Equality consist of a repetitive demonstration of the scale of this increase, which McCloskey calls “the Great Enrichment”. Before sometime around 1800, “everybody except a handful of nobles and priests and merchants” lived in “hell” – a nightmarish world without what we have come to accept as ordinary amenities. Whether they come from the anti-capitalist left, the reactionary right or the social-democratic middle, disgruntled critics of the free market don’t realise how lucky they have been.

Displaying her Chicago school roots, McCloskey tells them: “Look at the numbers.” The average income of the world now approaches that of present-day Brazil, which is “about the same as it was in the world-beating United States in 1941”. “We humans now produce and consume 70 . . . times more goods and services worldwide than in 1800,” she writes. In the two centuries since then, “the goods and services available to the average person in Sweden or Taiwan rose by a factor of 30 or 100”, which, in its highest estimate, amounts to “nearly 10,000 per cent”. As a result, “Income now is 30 to 100 times more than our ancestors could manage.” (The italics are McCloskey’s.)

Realising that this barrage of statistics may not convince everyone, she provides a lengthy list of examples of material betterment that can be seen “in your own room”, including “20 ballpoint pens stuffed into a mass-produced coffee cup” and “the organised distribution to and from Whole Foods of that bowl of apples over there”. As further evidence of the Great Enrichment, she tells us that, apart from houses, the average age of US consumer durables is “merely a little over four years”.

Against this background, it is silly to think of inequality as a problem. What matters is the reduction of absolute poverty – a problem that has been solved, “except in war-of-all-against-all countries such as Somalia”. Bothering about income and wealth inequality only leads to “slow growth and the encouragement of insatiable envy”.

Numbers aside, there is not much that is new in Bourgeois Equality. As McCloskey writes, the book is “embarrassingly, pathetically unoriginal” – a 21st-century rehearsal of the Whiggish narrative of progress promoted by eminent Victorians such as T B Macaulay. What is embarrassing in the book, however, is not any lack of novelty. It is how ideas and facts that are logically and historically distinct are casually conflated, while evidence showing their divergence in practice is passed over in silence. Material affluence need not go with personal freedoms, while the free market can work to undermine the bourgeois virtues. Liberal societies are more complicated and delicate than liberal ideologues understand. Wealth creation, the free market and a bourgeois way of life are not a package deal, each of them complementing and enhancing the rest. They can and do come separately and have often been at odds.

Consider the idea that modern prosperity is a by-product of European liberalism. This may have had some plausibility in 19th-century Europe – though McCloskey dismisses the role of imperialism too quickly. In any larger historical perspective, the notion that modern wealth is the creation of the European bourgeoisie would seem absurdly parochial. Japan became the first non-Western country to industrialise in the Meiji period (1868-1912), when the country was still largely feudal, and it did so without the benefit of Christianity, liberalism or the bourgeois virtues. Russia in late tsarist times wasn’t notably liberal or bourgeois but it had one of the highest growth rates in the world, which ended only with the First World War and the ensuing Bolshevik dictatorship. At present, Vladimir Putin commands stronger support from the country’s middle classes than any Western leader can claim in their own societies.

In post-Mao China, more human beings moved out of absolute poverty in a generation than in any similar period in human history. McCloskey barely mentions this and, when she does, attributes it to China’s “enthusiastic” adoption of “Friedmanite ideas”. But China never embraced free-market ideology. The country experimented with a pragmatic kind of market-Leninism, aiming to raise living standards without surrendering overall control of the economy. Under Xi Jinping, the government is prioritising regime stability over rapid growth – a stance that may not prove unpopular among the country’s middle classes.

No doubt McCloskey will reply that, at some point, China will have to adapt to a growing demand for liberalisation as the country grows slowly richer. After all, the idea that increasing affluence produces a middle-class yearning for political freedom is one of the ruling clichés of the age. But there is no reason to suppose that the link between a rising bourgeoisie and expanding liberal freedoms that existed in some parts of Europe two centuries ago is anything like a universal law.

History does not show the European bourgeoisie exhibiting any pronounced devotion to such freedoms. In France, the middle classes welcomed Napoleon’s imperialism, then turned to reactionary monarchy. In interwar Europe, they were the first to flock to fascism. In Germany, resistance to Nazism was confined to a handful of conservative Catholics, Jewish groups, sections of the labour movement (at least until the Nazi-Soviet pact) and ele­ments of the aristocratic-military caste. There was scarcely a whisper of protest from the country’s teachers, doctors and lawyers, who served the Nazi regime obediently from the moment it came to power and for as long as it existed. At present, the middle classes are once again flirting with far-right authoritarianism in a number of European countries. Like the Marxian faith that the proletariat is the historical vehicle of a socialist future, the liberal belief that an expanding global bourgeoisie is the vanguard in a grand march to universal freedom is a myth.

At the same time, unchecked free markets do not cohabit easily with a middle-class way of life. A bourgeois rhetoric has been more entrenched and pervasive in the US than anywhere in the world. But rhetoric can’t disguise objective social conditions indefinitely and, right now, any prospect of a bourgeois way of life is fast disappearing for the majority of Americans. McCloskey seems not to have noticed the fact but virtues such as prudence and foresight become dysfunctional in a society where professional skills are rendered repeatedly obsolete, career structures disappear, chronic or catastrophic illness is financially ruinous and education is a road to lifelong debt.

She detects in the novels of Jane Austen a sympathy for bourgeois life not found in much of European literature; Austen, however, would hardly have recognised the daily scramble of America’s former middle classes to survive until the next paycheck as being any sort of bourgeois life. Certainly, incomes are many times higher than in the past. But, for many, life is more precarious, and any hope of betterment for themselves or their children more elusive, than in previous generations. For quite a few, a life of the sort portrayed in Breaking Bad is closer to reality.

Rather than extending the middle class to include ever wider sections of society, the free market has worked to unravel bourgeois life. Rapidly rising levels of inequality are a part of the process. McClos­key seems to think that being concerned about the widened gulf between the rich and the rest is an expression of envy. But you don’t need to believe that economic equality is intrinsically desirable to recognise that extreme inequalities in income and wealth can be harmful. Money buys power and, when this happens on a system-wide scale, politics becomes a rigged auction. In the US, the inordinate increase of inequality of recent decades has produced a popular revolt against the political elites that has yet to run its course.

Like free-market ideologues everywhere, McCloskey insists that it is only absolute poverty that matters. But when it translates into a lack of standing in society, relative poverty can matter a great deal. In his wonderful comic novel Our Man in Havana, Graham Greene has a suave Cuban military interrogator remarking with a smile that he hasn’t tortured a suspect because the man doesn’t belong to “the torturable class”. Batista-style interrogation techniques may not be so common in the US but mass incarceration has been institutionalised on a scale unparalleled in any other advanced country. One of the perils of being poor in the US today is that you belong to the imprisonable class.

At the end of Bourgeois Equality, McClos­key writes:

 

What changed with accelerating mass from 1600 and 1800 was how people talked about each other . . . A rhetorical-ethical Revaluation is what began to happen on the path to a business-respecting – but not therefore virtue-ignoring – civilisation, first in some scattered cities in Europe in the Middle Ages, then in north-western Europe and its offshoots, but at last in fully modern form, potentially, everywhere. 

 

The “Revaluation”, in short, came out of a rhetoric that could, and will, enrich the world.

Rhetoric does have a certain power – at least over those who are intoxicated by it. Reading this grandiloquent book, I couldn’t help recall euphoric neoconservatives in Washington assuring me before the invasion of Iraq that, within five years, the country’s middle classes would be reading the Wall Street Journal daily to check how their stock portfolios were doing. It was obviously a delusional vision and events have worked out rather differently. That’s the trouble with rhetoric. Reality somehow keeps breaking in. 

Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World by Deirdre Nansen McCloskey is published by University of Chicago Press (768pp, £30.86)

John Gray is the New Statesman’s lead book reviewer. His latest book is The Soul of the Marionette: A Short Enquiry into Human Freedom.

This article appears in the 26 May 2016 issue of the New Statesman, The Brexit odd squad